Basic Question About Health Insurance

[RASAP]

Soon, we (spouse & I) will be applying for health insurance in preparation for early retirement. A couple of questions:

1. Will we apply together and get a single policy that covers both of us or will we apply separately, each receiving our own independent policy?

2. If we have a single policy and one of us dies, does the policy remain in tact for the surviving spouse or will the surviving spouse have to re-qualify?

Thanks in advance.

 

[Rich_by_the_Bay]

RASAP, the answers depend on your particular contract. They vary state to state, plan to plan.

In general, group policies cover either individual, family (regardless of how many members) or (sometimes) a couple. Individual policies are more commonly for individuals but also offer family options.

As to continuation upon the death of one family member, check your policy. Sorry to be so vague, but experience teaches that this whole area is subject to huge variation from setting to setting.

 

[Martha]

I agree with Rich.

Talk to a good agent about your options.

 

[TromboneAl]

Note on one policy vs. two. My HSA plan has a $3,500 deductible. If we had a joint plan, the deductible would be $7,000. Two individual plans with $3,500 deductibles each are much better.

 

[RASAP]

Note on one policy vs. two. My HSA plan has a $3,500 deductible. If we had a joint plan, the deductible would be $7,000. Two individual plans with $3,500 deductibles each are much better.

Good point. This is the kind of thing I'm looking for.

Thanks to all for the feedback.

 

[Life_is_Good]

Age based pricing

My wife is 5 years my senior. When we shopped for health insurance we found that a single policy covering us both would be priced (for both) at the higher price tier based on older participant. It was less expensive to purchase individual policies to get one priced at the lower age premium.

 

[mickeyd]

applying for health insurance in preparation for early retirement

You will probably be offered COBRA for 18 months after retirement. That may also be a health insurance consideration.

 

[mn54]

Note on one policy vs. two. My HSA plan has a $3,500 deductible. If we had a joint plan, the deductible would be $7,000. Two individual plans with $3,500 deductibles each are much better.
_
How does the premium compare with one joint vs. two individual policies?

 

[stargazer08]

I just recently purchased individual health insurance. Priced single and family HSA policy. It was cheaper to go with single but the deductible is higher. You have to know the price of each type of insurance and the deductible you are comfortable carrying to make an informed decision.

 

[RASAP]

You will probably be offered COBRA for 18 months after retirement. That may also be a health insurance consideration.

Can you elaborate?

When I retire, I have the option to continue my current company health plan - at my expense - $770/mo for the two of us. I plan to keep this option in my back pocket while applying for private insurance in hopes of getting a lower premium. Is there a reason I should consider COBRA? Once I give up the company health plan option, it is gone forever.

 

[Rich_by_the_Bay]

Can you elaborate?

When I retire, I have the option to continue my current company health plan - at my expense - $770/mo for the two of us. I plan to keep this option in my back pocket while applying for private insurance in hopes of getting a lower premium. Is there a reason I should consider COBRA? Once I give up the company health plan option, it is gone forever.

Sounds like your company policy allows for "continuation" upon termination at your own expense. COBRA is a law which requires companies to provide that for 18 months only (assuming they do not offer continuation insurance). So, if you are willing to pay the premium on your own, you should be set.

Once caution: if you defer taking the continuation policy upon your termination, you might not be able to enroll again; most plans I know of require uninterrupted acceptance of the policy -- any gaps make you ineligible. Sounds like you should consider sticking with your current policy for the security of it; saving a bit of money on premiums may not be worth it since individual policies can rise in cost, disappear if the company stops writing that line of insurance, etc.

 

[ziggy29]

Note on one policy vs. two. My HSA plan has a $3,500 deductible. If we had a joint plan, the deductible would be $7,000. Two individual plans with $3,500 deductibles each are much better.

Agreed, but you will likely pay more for two separate policies. When pricing them you need to figure out how much more you'd pay for two separate policies, and if it's worth the higher premiums to get two smaller, individual deductibles. Depending on circumstances, it could be better to keep the savings and plow it into the HSA.

 

[RASAP]

... Sounds like you should consider sticking with your current policy for the security of it; saving a bit of money on premiums may not be worth it since individual policies can rise in cost, disappear if the company stops writing that line of insurance, etc.

Interesting...

So if I could get individual policies with BC/BS or UHC (or some other name brand) for say $200 per month less than my company coverage I should consider that? It also sounds like you are saying my company policy would not rise in cost as much as an individual policy. Did I interpret that correctly? I have tried to find out the historical cost of the company coverage but the only information I was able to find was the current year's cost.

Health insurance will be (by far) our single biggest expense in retirement so I need to make a decision that is right for the long-term. All advice and information is appreciated.

 

[ziggy29]

It also sounds like you are saying my company policy would not rise in cost as much as an individual policy. Did I interpret that correctly?

Even if individual and employer group premiums rose the same in percentage terms, in actual dollars you'll feel the individual policy increases more because your employer isn't sharing 70-80% of the cost as many do. You'll feel 100% of the increase, not just 20-30% of it.

 

[toofrugalformycat]

I suggest talking with an insurance broker who can sell from many companies, who should be able to compare costs for you. But don't just believe the broker, read the fine print yourself too.
Also beware of what happened to me - after several tries I finally got insurance with what I considered a reputable company (Mutual of Omaha), but after a year or so I got a letter from them, saying they were closing all the policies in my state, and I had to find another company!

 

[RASAP]

Even if individual and employer group premiums rose the same in percentage terms, in actual dollars you'll feel the individual policy increases more because your employer isn't sharing 70-80% of the cost as many do. You'll feel 100% of the increase, not just 20-30% of it.

Ziggy,

I've read your reply several times and it's just not sinking in. I think you are saying that the company policy will not rise in cost (real dollars per year) as fast as an individual policy would. What I don't understand is why this would be the case? Can you please explain further?

 

[ziggy29]

Ziggy,

I've read your reply several times and it's just not sinking in. I think you are saying that the company policy will not rise in cost (real dollars per year) as fast as an individual policy would. What I don't understand is why this would be the case? Can you please explain further?

What I'm saying is this. Most people who have coverage through their employer only pay a small percentage of the total premium. So when a $1000 monthly employer group policy rises 10% or $100, much of that $100 increase may be eaten by the employer (but usually not all of it). In a $1000 individual plan, the entire $100 is eaten by the individual policyholder.

The company plan may well rise as much as (or more than) the individual plan, but the portion paid by the insured family may rise less.

 

[RetireeRobert]

Interesting...

So if I could get individual policies with BC/BS or UHC (or some other name brand) for say $200 per month less than my company coverage I should consider that?

You should "consider" ALL policies for which you are eligible.

One strenght of staying with (continuing) your current employer group policy if you can, even on a self-pay basis, is that the insurer cannot slap new pre-exisiting conditions exclusions on you. Also, as long as the employer continues to offer this group coverage to employees, the insurer cannot single you out as an individual and cancel the coverage.

These are hazards that can happen with individual (or family) policies purchased on your own, and not as part of a group.

If you and family have no current serious health problems this may not be a fear for you with individual health policies, and you may want to jump on a $200/month savings if you could save that much going this route.

Another possibility, sometimes group coverages are offered to members of organizations, such as professional affiliations (like if you were an accountant and are still member of AICPA or state Society, or lawyer and the State Bar, etc). Cast your net wide in search of possible options.

And do not forget to talk to your employer HR Dept. about health insurance options for retirees. They can give you good current info on continuation policies, COBRA rights,, other options. Also check in with your State Insurance Commissioner office (check their website) for options.

 

[RASAP]

What I'm saying is this. Most people who have coverage through their employer only pay a small percentage of the total premium. So when a $1000 monthly employer group policy rises 10% or $100, much of that $100 increase may be eaten by the employer (but usually not all of it). In a $1000 individual plan, the entire $100 is eaten by the individual policyholder.

The company plan may well rise as much as (or more than) the individual plan, but the portion paid by the insured family may rise less.

OK, I see now. However, since I have to bear the full cost of the coverage after I retire, I will also bear the full cost of any future increases thus, if I am understanding you correctly, the advantage you are pointing out does not apply to my situation. Correct?

 

[RASAP]

You should "consider" ALL policies for which you are eligible.

One strenght of staying with (continuing) your current employer group policy if you can, even on a self-pay basis, is that the insurer cannot slap new pre-exisiting conditions exclusions on you. Also, as long as the employer continues to offer this group coverage to employees, the insurer cannot single you out as an individual and cancel the coverage.

These are hazards that can happen with individual (or family) policies purchased on your own, and not as part of a group.

If you and family have no current serious health problems this may not be a fear for you with individual health policies, and you may want to jump on a $200/month savings if you could save that much going this route.

Another possibility, sometimes group coverages are offered to members of organizations, such as professional affiliations (like if you were an accountant and are still member of AICPA or state Society, or lawyer and the State Bar, etc). Cast your net wide in search of possible options.

And do not forget to talk to your employer HR Dept. about health insurance options for retirees. They can give you good current info on continuation policies, COBRA rights,, other options. Also check in with your State Insurance Commissioner office (check their website) for options.

I agree. My plan is to apply for individual (private) insurance through a broker (no professional affiliations available to me) and see what they come up with. Then I can compare and make a choice. Right now, I have no idea whether $770 per month is high, low, or about the same as what I can get on my own. The company plan has the advantage of no pre-existing conditions - something I MAY be faced with on a individual policy.

Hummmm... What if I continue with my company policy and in a few years they decide to change carriers. I wonder if I will be included with the new carrier as a retiree?

 

[RetireeRobert]

Hummmm... What if I continue with my company policy and in a few years they decide to change carriers. I wonder if I will be included with the new carrier as a retiree?

I would suggest you do pose that question to your State Insurance Commissioner office.

My own thought is the answer is "yes", you would be included with the new carrier as part of your (former) employer's group (even though you are then retired). I think I recall something, somewhwere about an employer must continue to offer retirees group coverage (if they do offer it at one point) as long as they offer group coverage to existing employees. I cannot remember if this is part of federal rules, or my state rules, or what.

 

[Martha]

Hummmm... What if I continue with my company policy and in a few years they decide to change carriers. I wonder if I will be included with the new carrier as a retiree?

What does your employment contract say? If you are entitled retiree health insurance, the company has to figure out how to get your retiree health insurance.

 

[RASAP]

What does your employment contract say? If you are entitled retiree health insurance, the company has to figure out how to get your retiree health insurance.

Sounds right to me. I'll be checking into this.

One thing that occured to me over the weekend: If I continue my company insurance, it will not be an HSA plan. What dollar value can be placed on an HSA plan when comparing options?